Small companies looking to launch initial public offerings are submitting initial documents confidentially and are taking advantage of certain, looser accounting rules under the Jobs Act, a review of Ernst & Young data shows.

Signed into law last April, the Jumpstart Our Business Startups Act was aimed at addressing concerns that small companies were constrained by regulation. It eased accounting and disclosure requirements on smaller companies with the intent of helping them raise capital and reduce costs.

Under these rules, so-called "emerging-growth companies," those with less than $1bn in annual revenue, are allowed to keep their filings confidential until they are ready to market the shares to potential investors.

Filing confidentially can keep a company's financial and strategic plans away from the prying eyes of competitors. It also can benefit companies that are reluctant to tip their hand at intentions to go public.

"One advantage of the Jobs Act is that it affords degrees of freedom, as opposed to having a rigid rule," said Roelof Botha, partner at private equity firm Sequoia Capital and chief financial officer at PayPal when it went public in 2002. "If entrepreneurs were fearful about [an IPO], and maybe would have sought an acquisition exit, this could tilt them in favor of becoming a public company instead," he said.

From the inception of the Jobs Act through the end of last year, these smaller companies have represented the lion's share of new IPO registrations, according to analysis conducted by Ernst & Young, an accounting, consulting and financial advisory firm.

Nearly three quarters of the 87 US companies that publicly filed their IPO registration between the start of April and year end counted themselves as "emerging- rowth," the data showed.

The majority of these smaller companies are opting to take advantage of the Jobs Act provisions to confidentially submit registration documents to the Securities and Exchange Commission. Some 59% of eligible companies submitted their preliminary prospectus documents confidentially to the SEC, paperwork that remains unseen by the public until 21 days before a company can launch its so-called "roadshow" to market its IPO to investors.

"It used to be that it looked bad if your IPO was on the shelf and it didn't make it to market," said Don Duffy, president of ICR, a corporate and financial communications firm that provides companies consulting services from guidance for roadshows to compliance issues. "With a confidential filing, companies can be ready to go when the window is open without concern for how long they've been on file," he said.

Confidential filing means that for everyone but deal insiders, the pipeline looks much smaller than in years past. As of Friday, just 30 issuers had either submitted or updated registration documents over the past six months to raise a total of roughly $5.7bn, according to Ipreo, a market intelligence firm. That is the smallest pipeline by deal count and dollar amount since the middle of 2009.

Small companies have lined up to defer certain accounting rules. For instance, every emerging growth company that filed IPO documents last year used Jobs Act provisions to opt out of outside audits of their internal controls for longer than previously allowed, according to Ernst & Young's data. Before the Jobs Act, all companies except the smallest had to have their outside auditors weigh in annually on whether their internal controls were effective.

But not all provisions have taken hold. Ernst & Young's data show that most IPO filers are eschewing the option to disclose fewer years of financial documents. Just 31% of eligible companies provided two years of financial data last year, opting to show more than the Jobs Act requires.

The fact that some public companies could have been well under way in prepping for greater disclosure could have prompted companies to post more, rather than less, financial data in the months after the new rules, said Herb Engert, strategic growth markets practice leader for Ernst & Young.

Some advisers said the trend of greater disclosure likely would continue as a means to appease discerning investors.

"The whole point is what you are signalling. If you have five years or so of financial history and you aren't showing them all, the question becomes, why aren't you?" said Botha, who serves as a board member of Xoom.

Xoom, which filed confidentially last year and went public on Friday, reported five years of financial data.